case no 28000/ac - fdi moot · 2016-09-18 · on issues in international investment agreements ii,...

INTERNATIONAL CHAMBER OF COMMERCE

CASE NO 28000/AC

IN THE PROCEEDING

BETWEEN

MR. PETER EXPLOSIVE

(CLAIMANT)

V.

REPUBLIC OF OCEANIA

(RESPONDENT)

MEMORIALS FOR CLAIMANT

19 SEPTEMBER 2016

TEAM LACHS

ii

TABLE OF CONTENTS

Table of Abbreviations ...................................................................................................................... vi

List of Authorities............................................................................................................................. vii

Statement of Facts .............................................................................................................................. 1

Arguments........................................................................................................................................... 3

Part I: Applicable Law ................................................................................................................... 3

Part II: Jurisdiction........................................................................................................................ 4

I. The Tribunal has Ratione Materiae Jurisdiction to Adjudicate the Present

Dispute........................................................................................................................... 4

A. Mr. Explosive invested according to Art. 1 Euroasia BIT by purchasing 100%

of the shares in the company, Rocket Bombs Ltd ...................................................... 5

B. Rocket Bombs Ltd is a company within the territory of Oceania and therefore

its shares can be considered as an investment under Art. 1 Euroasia BIT ................. 5

II. The Tribunal has Ratione Personae Jurisdiction to Adjudicate the Present

Dispute........................................................................................................................... 5

A. Fairyland´s secession was lawful ......................................................................... 6

iii

B. The rules on succession of states in international treaty law are observed ........ 10

C. Alternatively, Mr. Explosive is a national of Euroasia, since he is “most closely

connected” to Euroasia ............................................................................................. 12

III. The MFN provision of the Euroasian BIT grants Mr. Explosive access to rely

upon the dispute resolution provisions of the Eastasia BIT ................................... 14

A. The MFN provisions set out in Art. 3 Euroasia BIT extend to both procedural

and substantive provisions on dispute settlement..................................................... 14

B. Mr. Explosive’s treatment under the Euroasia BIT is less favourable than the

treatment accorded to investors from Eastasia ......................................................... 18

C. Dispute settlement falls within the scope of the Euroasia BIT’s MFN

provision ................................................................................................................... 19

D. The MFN provision does not violate public policy ........................................... 20

E. In case the Tribunal finds that Mr. Explosive is considered as a national from

Eastasia, Mr. Explosive may nevertheless invoke Art. 8 Eastasia BIT .................... 21

IV. Mr. Explosive made a protected investment notwithstanding the Clean Hands

Doctrine ....................................................................................................................... 21

A. The Clean Hands Doctrine is not applicable ...................................................... 22

iv

B. Even if it were applicable, mere allegations without evidence are not

sufficient ................................................................................................................... 23

C. Oceania’s allegations lack timely relevance regarding the ‘investment’ ........... 24

Conclusion on Jurisdiction .......................................................................................................... 25

Part III: Merits ............................................................................................................................. 26

I. Oceania’s Actions Constitute an Indirect Expropriation of Mr. Explosive´s

Lawful Investment ..................................................................................................... 26

A. Mr. Explosive was effectively deprived of an economic benefit ....................... 27

B. Oceania deprived Mr. Explosive of a “substantial” part of the value of

Rocket Bombs Ltd .................................................................................................... 28

C. A broad Interpretation of the Scope of Art. 4 Euroasia BIT is warranted .......... 28

D. Oceania´s Executive Order significantly interferes with Mr. Explosive´s

property rights .......................................................................................................... 30

E. Oceania´s actions are not proportionate to the aim sought to be realized .......... 31

F. Mr. Explosive held a “legitimate expectation” that his investment would be

protected under the BIT for a period of at least twenty years .................................. 33

v

II. Alternatively, should the Tribunal find that no indirect expropriation

occurred, Oceania breached its obligation to provide the standard of Fair and

Equitable Treatment (FET) to Mr. Explosive´s investment pursuant to

Art. 2 (2) Euroasia BIT .............................................................................................. 35

A. The FET Standard is a higher Standard than that of the Minimum Standard of

Treatment under International Law .......................................................................... 35

B. Oceania did not provide a predictable and transparent legislative framework .. 36

C. Oceania acted in an arbitrary manner................................................................. 38

D. Oceania did not meet Mr. Explosive´s legitimate expectations ......................... 38

III. Mr. Explosive did not contribute to the damages suffered .............................. 41

A. Mr. Explosive did not contribute to the damages because the risk of losing all

sales was not inherent in the undertaking of operating in the arms sector ............... 41

B. Mr. Explosive did not contribute to the damages because he reasonably relied

on the stabilization clause of Art. 12 Euroasia BIT .................................................. 42

C. Mr. Explosive did not fail to mitigate damages because he did not have the

possibility to do so. ................................................................................................... 43

CONCLUSION ON THE MERITS ............................................................................................ 44

REQUEST FOR RELIEF ............................................................................................................... 45

vi

TABLE OF ABBREVIATIONS

Abbreviation Full Form

Art. Article

BIT Bilateral Investment Treaty

Eastasia BIT Agreement between the Republic of Oceania and the Republic of

Eastasia for the Promotion and Reciprocal Protection of Invest-

ments

Euroasia BIT Agreement between the Republic of Oceania and the Republic of

Euroasia for the Promotion and Reciprocal Protection of Invest-

ments

FET Fair and Equitable Treatment

ICC International Chamber of Commerce

ICJ International Court of Justice

ICJ Statute International Court of Justice Statute

ICSID International Centre for Settlement of Investment Disputes

MFN Most-Favoured Nation

MST Minimum Standard of Treatment

NEA National Environmental Authority

No. Number

UN United Nations

UNCITRAL United Nations Commission on

International Trade Law

UNCTAD United Nations Conference on Trade and Development

UNGA United Nations General Assembly

VCLT Vienna Convention on the Law of Treaties

VCST Vienna Convention on Succession of States in Respect of Trea-

ties

vii

LIST OF AUTHORITIES

ABBREVIATION

FULL CITATION

Akehurst

Akehurst, Michael, ‘The Use of Force to Protect Nation-

als Abroad’, International Relations, vol. 5, no. 5 (1977)

Bayefsky

Bayefsky, Anne F. Self-Determination in International

Law, Quebec and Lessons Learned, available at:

https://www.gbv.de/dms/spk/sbb/toc/254581455.pdf

Blackman

Blackman, Jeffrey L. Michigan Journal of International

Law, Vol. 19 (1998)

Brilmayer

Brilmayer, Lea, Secession and Self-Determination: A

Territorial Interpretation, Faculty Scholarship Series Pa-

per 2434 (1991)

Brower/Schill

Brower, Charles N./Schill, Stephan W., Chicago Journal

of International Law: Vol. 9: No. 2, Article 5 (2009)

Brownlie/Crawford

Brownlie, Ian/Crawford, James, Principles of Public In-

ternational Law, 5th edition, Oxford 2012

Buchanan

Buchanan, Justice, Legitimacy and Self-determination

Burke-White1

Burke-White, William W., "Crimea and the International

Legal Order", University of Pennsylvania Law School,

Penn Law: Legal Scholarship Repository, Faculty Schol-

arship (2014)

https://www.gbv.de/dms/spk/sbb/toc/254581455.pdf

viii

Burke-White2

Burke-White, William W., ‘Power Shifts in International

Law: Structural Realignment and Substantive Pluralism’,

Harvard International Law Journal (2014)

Dolzer/Schreuer

Dolzer, Rudolf/Schreuer, Christoph, Principles of Inter-

national Investment Law, 2. Auflage, Oxford 2012

Dugan/Wallace/Rubins/Sa-

bahi

Dugan Christopher F. /Don Wallace, Jr./Noah Rubins/

Borzu Sabahi, Investor-State Arbitration, Oxford 2008

Faist

Faist, Thomas Dual Citizenship in Europe: From Nation-

hood to Societal Integration, New York 2007

Fazal

Tanisha M, Fazal, State Death: The Politics and Geogra-

phy of Conquest, Occupation, and Annexation,Princeton

2008

Fietta

Expropriation and the “Fair and Equitable” Standard,

Journal of International Arbitration, Volume 23, Issue 5

(2006), available at: http://roboalbanconue-

vomundo.com/pdf/bnm-memorial-de meritos/an-

exo%20vii.%20doctrina/anexo%2011.pdf

Franck

Franck, Thomas Self-Determination in International

Law: Quebec and Lessons Learned

Gordon

Gordon, David J., ‘Use of Force for the Protection of Na-

tionals Abroad: The Entebbe Incident Note’, Case West-

ern Journal of International Law, vol. 9, 1977

Happ

Richard Happ, Awards and Decisions of ICSID Tribunals

in: German Yearbook of International Law 47 (2004)

ix

Hepburn

Hepburn, Jarrod, Long-unpublished award against Re-

public of Georgia finds FET breach following bad faith

negotiations, but frowns on broad notions of judicial ex-

propriation, (2016) available at: https://www.iare-

porter.com/articles/longunpublished-award-against-re-

public-of-georgia-finds-fet-breach-following-bad-faith-

negotiations-but-frowns-onbroad-notions-of-judicial-ex-

propriation/

Hofmann

Hofmann, Rainer, Annexation, Max Planck Encyclope-

dia of Public International Law, Oxford February 2013

Hudson

Hudson, Manley O., Report on Nationality, Including

Statelessness, Extract from the Yearbook of the Interna-

tional Law Commission, Vol. II. (1952)

Jacob/Schill

Bungenberg, Marc [Ed.]/Griebel, Jörn [Ed.]/Hobe,

Stephan [Ed.]/Reinisch, August[Ed.] International In-

vestment Law, A Handbook, Baden-Baden 2015

Kläger

Kläger, Roland, ‘Fair and Equitable Treatment’ in Inter-

national Investment Law, New York 2011

Maupin

Maupin, Julie A., “MFN-based Jurisdiction in Investor-

State-Arbitration: Is There Any Hope for a Consistent

Approach?”, Journal of International Economic Law

14(1) (2011)

Mavrik

Mavrič, Urska, Rethinking the Right to Secession: A

Democratic Theory Account, Hungary 2012, available at:

file:///C:/Users/User/Downloads/mavric_urska.pdf

Reinisch

Reinisch, August, How Narrow are Narrow Dispute Set-

tlement Clauses in Investment Treaties?, Journal of Inter-

national Dispute Settlement (2011)

Roethke

Roethke, Peter, The Right to Secede Under International

Law: The Case of Somaliland, Journal of International

Service (2011) available at: http://www.ameri-

can.edu/sis/jis/upload/3roethkef11.pdf

https://www.iareporter.com/articles/longunpublished-award-against-republic-of-georgia-finds-fet-breach-following-bad-faith-negotiations-but-frowns-onbroad-notions-of-judicial-expropriation/





http://www.american.edu/sis/jis/upload/3roethkef11.pdf

http://www.american.edu/sis/jis/upload/3roethkef11.pdf

x

Schill

Schill, Stephan, Allocating Adjudicatory Authority:

Most-Favoured-Nation Clauses as a Basis of Jurisdiction,

A Reply to Zachary Douglas, Journal of International

Dispute Settlement (2011)

Vandevelde

Vandevelde, Kenneth J., United States Investment Trea-

ties: Policy and Practice,Davis 2005

Weis

Weis, Paul, Nationality and Statelessness in International

Law, 2nd Edition, Alphen aan den Rijn 1979

MISCELLANEOUS

OECD (2004)

OECD Working Papers on International Investment,

“Most-Favoured-Nation Treatment in International In-

vestment Law”, available at:

http://dx.doi.org/10.1787/518757021651

UNCTAD, Bilateral Investment

Treaties

United Nations Conference on Trade and Development,

Bilateral Investment Treaties 1995-2006: Trends in In-

vestment Rulemaking, page. 66 (2007), available at:

http://unctad.org/en/docs/iteiia20065_en.pdf

UNCTAD, FET

United Nations Conference on Trade and Development,

Fair and Equitable Treatment, Series on Issues in Inter-

national Investment Agreements II, 2012

http://dx.doi.org/10.1787/518757021651

http://unctad.org/en/docs/iteiia20065_en.pdf

xi

LIST OF LEGAL SOURCES

ABBREVIATION FULL CITATION

STATUTES AND TREATIES

Hague Convention Hague Convention on certain questions relating to the

conflict of nationality laws 1930

Montevideo Inter-American Convention on Nationality signed at

Montevideo on 26 December 1933

Peace Treaty with Italy Peace Treaty with Italy 10 February 1947

Sudanese Comprehensive

Peace Agreement

Sudanese Comprehensive Peace Agreement

9 January 2005

Treaty between Czechoslo-

vakia and the U.S.S.R.

Treaty between Czechoslovakia and the U.S.S.R. of

29 June 1945

Treaty of Athens Treaty of Athens, 14 November 1913

Universal Declaration of

Human Rights Universal Declaration of Human Rights of 1993

UNICCPR

United Nations International Covenant on Civil and

Political Rights Adopted and opened for signature, rat-

ification and accession by General Assembly resolu-

tion 2200A (XXI) of 16 December 1966 entry into

force 23 March 1976

UNICESCR

United Nations International Covenant on Economic,

Social and Cultural Rights, Adopted and opened for

signature, ratification and accession by General As-

sembly resolution 2200A (XXI) of 16 December 1966

entry into force 3 January 1976

UNGA Resolution 1514 (XV) United Nations General Assembly Resolution 1514

(XV) of 14 December 1960

xii

UNCTAD BIT U.N. Conference on Trade and Development, Bilateral

Investment Treaties in the Mid-1990s, at 66 (1998).

UNCTAD FET

United Nations Conference on Trade and Develop-

ment, Fair and Equitable Treatment, UNCTAD Series

on Issues in International Investment Agreements II,

New York and Geneva, 2012

VCLT Vienna Convention on the Law of Treaties,

23 May 1969, 1155 U.N.T.S. 331

ABITRAL DECISIONS

Champion Trading v. Arab

Republic

Champion Trading Company, Ameritrade Interna-

tional, Inc. v. Arab Republic of Egypt, ICSID Case No.

ARB/02/9, Decision on Jurisdiction (October 2006)

Maffezini v. Spain

Emilio Agustín Maffezini v. The Kingdom of Spain, IC-

SID Case No. ARB/97/7, Decision of the Arbitral on

Objections to Jurisdiction (25 January 2000)

Nottebohm v. Guatemala

Nottebohm, Liechtenstein v. Guatemala, ICJ, Prelimi-

nary Objection (Second phase), Judgment, [1955] ICJ

Rep 4, ICGJ (April 1955)

Plama v. Bulgaria

Plama Consortium Limited v. Republic of Bulgaria,

ICSID Case No. ARB/03/24, Decision on Jurisdiction

(8 February 2005)

Magalhais v. Fernandes Magalhais v. Fernandes, Ann. Digest, 10 (1941-2), no.

83

Gas Natural v. Argentina Gas Natural SDG, S.A. v. Argentina, ICSID Case No.

ARB/03/10, Decision on Jurisdiction, 17 June 2005

RosInvest v. Russia RosInvest Co. UK Ltd v. Russia, SCC Case No.

079/2005, Award on Jurisdiction, 1 October 2007

Impregilo v. Argentina Impregilo S.p.A. v. Argentine Republic, ICSID Case

No. ARB/07/17, Award, 21 July 2011

Sociedad General v. Argentina

Sociedad General de Aguas de Barcelona S.A., and In-

terAguas Servicios Integrales del Agua S.A. v. Argen-

tina, ICSID Case No. ARB/03/17, Decision on Juris-

diction, 16 May 2006

xiii

MTD Equity v. Chile

MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Repub-

lic of Chile, ICSID Case No. ARB/01/7, Award, 25

May 2004

Hilmarton v. Omnium de

Traitement et Valorisation

Hilmarton. Ltd v. Omnium de Traitement et de Valori-

sation, ICC Award No. 5622

EDF v. Romania EDF (SERVICES) LIMITED vs. Romania, ICSID

CASE NO. ARB/05/13

CME v. Czech Republic CME v Czech Republic B.V. v. The Czech Republic,

UNCITRAL, Award 13 March 2003

Tippets v. Tams-Affa Consulting Tippets v Tams-Affa Consulting Eng'rs, (1984) 6 Iran-

US CTR 219, 225–6

Int'l Sys v. Indus. Dev. Int'l Sys. & Control Operations v Indus. Dev. and Ren-

ovation Org., (1986) 12 Iran-US CTR 239

Payne v. Iran Payne v Iran, (1986) 12 Iran-US CTR 3

Phelps v. Iran Phelps Dodge Corp. v Iran, (1986) 10 US CTR 121

Pope & Talbot v. Canada Pope & Talbot, Inc. v. Government of Canada, UN-

CITRAL, Interim Award, 26 June 2000

CMS Gas v. Argentina CMS Gas Transmission Co. v. Argentine Republic, IC-

SID Case No. ARB/01/08, Award, 12 May 2005

Waste Management v. Mexico Waste Management, Inc. v. United Mexican States, IC-

SID Case No. ARB (AF)/00/3, Award, 30 April 2004

Tokios Tokelés v. Ukraine Tokios Tokelés v. Ukraine, ICSID Case No.

ARB/02/18

Feldman v. Mexico Marvin Roy Feldman Karpa v. United Mexican States,

ICSID Case No. ARB(AF)/99/1

Revere Copper v. OPIC Revere Copper & Brass, Inc. v. OPIC, 17 I.L.M. 1978

Tecmed v. Mexico Técnicas Medioambientales Tecmed, S.A. v. The

United Mexican States, Award, 29 May 2003

Azurix v. Argentina Azurix Corp. v. The Argentine Republic, ICSID Case

No. ARB/01/12, Award, 14 July 2006

Texaco v. Libya

Texaco Overseas Petroleum Co, California Asiatic Oil

Co v Government of Libyan Arab Republic, Award, Ad

Hoc Arbitration 1977, 53 ILR 389 (1997).

El Paso v. Argentina El Paso v Argentina, Award, 31st October 2011

Saluka v. Czech

Saluka v. Czech Republic, Partial Award, IIC 210

(2006), ICGJ 368 (PCA 2006), (2010) 15 ICSID Rep

274, 17 March 2006

xiv

Metalclad v. Mexico

Metalclad Corporation v. The United Mexican States,

ICSID Case No. ARB(AF)/97/1, Final Award,

30 August 2000

Telenor v Hungary

Telenor Mobile Communications AS v Hungary,

Award, ICSID Case No ARB/04/15, (2006) 21 ICSID

Rev-FILJ 603, IIC 248 (2006), 13 September 2006

Total v. Argentina Total SA v Argentina, Decision on liability, ICSID

Case No ARB/04/1, IIC 261, 27 December 2010

Thunderbird v. Mexico Thunderbird v. Mexico, Award, IIC 136, 26 January

2006

Letco v. Liberia

Liberian Eastern Timber Corporation v Liberia,

(1987) 2 ICSID Rev-FILJ 188, 650 F Supp 73 (SDNY

1986), (1987) 26 ILM 695, 12th December 1986

LG&E v. Argentina

LG&E Energy Corp., LG&E Capital Corp., and

LG&E International, Inc .v. Argentine Republic, IC-

SID Case No. ARB/02/1, Decision on Liability, 3 Oc-

tober 2006

Neer v. Mexico

LFH Neer and Pauline Neer v. Mexico, United States -

Mexico General Claims Commission, Decision of 15

October 1926

Bayerische HNL v. Council and

Commission Joined

Bayerische HNL and others v. Council and Commis-

sion Joined, Cases 83 & 94/76 and 4, 15 & 40/77

[1978] ECR

BRIDAS SAPIC v. Turkmenistan

BRIDAS SAPIC and ors v Turkmenistan, Third Partial

Award and Dissent, ICC Case No 9058/FMS/KGA,

IIC 37 (2000), 6 September 2000

Iran-US A/18 Iran-US Claims Tribunal, Case No A/18, 5 Iran-

U.S.C.T.R. 251 (1984), 6 April 1984

Daimler v. Argentina Daimler Financial Services AG v. Argentine Republic,

ICSID Case No. ARB/05/1, Award, 22 August 2012

INTERNATIONAL COURT CASES

Quebec

Judgments of the Supreme Court of Canada, Reference

re Secession of Quebec [1998], 20 August 1998, 2

S.C.R. 217

Kosovo

ICJ Reports, Advisory Opinion, Accordance with In-

ternational Law of the Unilateral Declaration of Inde-

pendence in Respect of Kosovo, 2010, available at:

http://www.icj-cij.org/docket/files/141/15987.pdf (last

accessed 15 September 2016)

Western Sahara ICJ, Advisory Opinion, Sahara Occidental, 1975

http://www.icj-cij.org/docket/files/141/15987.pdf

xv

ECHR Mellacher and Others

European Court of Human Rights, In the case of Mel-

lacher and Others v. Austria, judgment of December

19, 1989, 48

ECHR James and Others

European Court of Human Rights, In the case of James

and Others, judgment of February 21, 1986, 50,

pages 19-20, available online at: http://hu-

doc.echr.coe.int

http://hudoc.echr.coe.int/

http://hudoc.echr.coe.int/

1

STATEMENT OF FACTS

1. The Republic of Oceania concluded two crucial Agreements for the Promotion and

Reciprocal Protection of Investments, respectively with the Republic of Euroasia (the

Euroasian Bilateral Investment Treaty (“Euroasia BIT”)) and the Republic of Eastasia

(“Eastasia BIT”). The Euroasia BIT came into force on 23 October 1995 and the Eastasia

BIT on 1 April 1993.

2. In February 1998, the Claimant, Mr. Explosive, purchased 100 % of “Rocket Bombs Ltd”,

a company located in Valhalla, Oceania. At this time, Mr. Explosive was a national of

Eastasia and resident of Fairyland. Subsequently, Mr. Explosive also became president

and sole member of the board of directors of the company.

3. In order to rebuild the decrepit company, resume arms production, and rehire numerous

workers from Valhalla, Mr. Explosive sought assistance from the Ministry of

Environment of Oceania. Filing a request for subsidisation he paved the way for his

company to obtain an obligatory environmental licence. Moreover, Mr. Explosive

arranged a private meeting with the President of the National Environmental Authority

(“NEA”) of Oceania to expedite this process. After the meeting on 23 July 1998, the NEA

of Oceania issued an environmental license approving the commencement of arms

production by Rocket Bombs Ltd. Subsequently, Rocket Bombs Ltd became increasingly

profitable, largely due to a 23 December 1998 contract with Euroasia’s Ministry of

National Defence. This contract was initially effective for a period of five years. On 28

February 2014, the parties concluded a new contract for a period of six years.

4. On 1 November 2013, the authorities of Fairyland held a referendum on the secession of

Fairyland from Eastasia and its reunification with its motherland, Euroasia. Fairyland was

historically a territory of Euroasia and the majority of people living in Fairyland are of

Euroasian origin. Like Mr. Explosive, the majority of Fairyland residents do not identify

with Eastasia and therefore preferred a reunification with Euroasia. After a long debate,

the government of Euroasia decided to reunify with Fairyland. Yet, the reunification

divided the international community. While one side recognised the reunification, the

other side, including Oceania and Eastasia, did not recognise the reunification.

2

5. Accordingly, the President of Oceania issued an Executive Order on Blocking Property

of Persons Contributing to the Situation in Eastasia, imposing sanctions on Rocket Bombs

and on Mr. Explosive, even though the people of Fairyland were merely exercising their

right of self-determination. All Oceanian companies that contracted with Rocket Bombs

declared that, pursuant to the Executive Order, they would no longer perform their

contractual obligations. Rocket Bombs Ltd consequently suffered a deterioration of its

business and a rapid decrease in the value of its shares, almost to zero. As a result, Mr.

Explosive could neither operate Rocket Bombs Ltd nor sell it.

6. Mr. Explosive now requests that Eastasia compensate him for the losses caused by the

Executive Order, in an amount no less than 120,000,000 USD. Finding no domestic court

in which to negotiate and exhausting all domestic avenues, Mr. Explosive now brings the

matter before the ICC.

3

ARGUMENTS

PART I: APPLICABLE LAW

7. The applicable law in this case includes both the Euroasia and Eastasia BIT. Mr.

Explosive submits that it is appropriate to interpret all matters in light of international law

for the following reasons:

(a) Pursuant to Art. 31 (3)(c) Vienna Convention on the law of treaties (“VCLT”), the

Tribunal may consider Art. 38 (1) of the International Court of Justice Statute (“ICJ

Statute”), which sets out the four primary sources of international law: international

conventions, whether general or particular, establishing rules expressly recognized by the

contesting states; international custom, as evidence of a general practice accepted as law;

the general principles of law recognized by civilized nations; judicial decisions and the

teachings of the most highly qualified publicists of the various nations, as subsidiary

means for the determination of rules of law. As the triad of the involved parties, Oceania,

Eastasia and Euroasia, are all members of the United Nations and have signed the VCLT

and Vienna Convention on Succession of States in Respect of Treaties (“VCST”), the

treaties must be applied mutatis mutandis.1

(b) Mr. Explosive submits his claims in compliance with the Rules of Arbitration of the

International Chamber of Commerce (“ICC Rules”). The ICC Rules provide a broad

scope regarding applicable law. Art. 21 ICC Rules reads “[...] the arbitral Tribunal shall

apply the rules of law which it determines to be appropriate.”

(c) Additionally, the International Centre for Settlement of Investment Dispute (“ICSID”)

Convention Arbitration Rules under Art. 42 (1) require that “[...] the Tribunal shall apply

the law of the Contracting State party to the dispute (including its rules on the conflict of

laws) and such rules of international law as may be applicable.”

1 Procedural Order No. 2, para. 8.

4

8. Consequently, the present issues of nationality, application of the Most-Favoured Nation

(“MFN”) provision, clean hands, expropriation, and damages must be settled in

accordance with international law. Other provisions of international arbitration courts as

legal sources should therefore be recognised as persuasive authority and applied.

PART II: JURISDICTION

9. Mr. Explosive submits that this Tribunal has jurisdiction to adjudicate the present dispute.

As a preliminary issue, the Tribunal has the power to rule on its own jurisdiction because

in accordance with recent case law, Art. 6 (3) ICC Rules codifies the doctrine of

Kompetenz-Kompetenz and permits the ICC Tribunal to rule on its own jurisdiction.2

10. Furthermore, because Mr. Explosive is a Euroasian national, he relies on the Euroasia

BIT in this claim. Moreover, the MFN provision of the Euroasia BIT permits Mr.

Explosive to invoke provisions of the Eastasia BIT.

I. The Tribunal has Ratione Materiae Jurisdiction to Adjudicate the Present Dispute

11. Art. 1 Euroasia BIT states in relevant part:

“The term ‘investment’ comprises every kind of asset directly or

indirectly invested by an investor of one Contracting Party in the territory

of the other Contracting Party”.

12. Therefore, in order to demonstrate the authority of this Tribunal to adjudicate the present

dispute, Mr. Explosive must (A) have made an investment (B) in the territory of Oceania.

2 See Petrobart v. Kyrgyz Republic, SCC Case No. 126/2003, Award, 29. March 2005, page 24.

5

A. Mr. Explosive invested according to Art. 1 Euroasia BIT by purchasing 100% of

the shares in the company, Rocket Bombs Ltd

13. The Euroasia BIT defines the term investment as “every kind of asset directly or indirectly

invested by an investor.” Art. 1 (b) Euroasia BIT further clarifies that shares of companies

are considered an asset under the Euroasia BIT. Mr. Explosive purchased 100% of the

shares of Rocket Bombs Ltd. Therefore, Mr. Explosive made an investment.3

B. Rocket Bombs Ltd is a company within the territory of Oceania and therefore its

shares can be considered as an investment under Art. 1 Euroasia BIT

14. Art. 1 Euroasia BIT requires any investment to be made “in the territory of the other

Contracting Party”. Rocket Bombs Ltd is a company in the territory of Oceania.4

Mr. Explosive is a national of Euroasia. Consequently, the investment was made in the

territory of the other Contracting Party.

15. Thus, for the reasons listed in (A) and (B) above, Mr. Explosive made an investment, and

that investment was made within the territory of Oceania. Therefore, Mr. Explosive

invested according to Art. 1 Euroasia BIT.

II. The Tribunal has Ratione Personae Jurisdiction to Adjudicate the Present Dispute

16. Art. 1 (2) Euroasia BIT states in relevant part:

“The term ‘investor’ shall mean any natural or legal person of one

Contracting Party who invests in the territory of the other Contracting

Party”.

17. Mr. Explosive is an investor under Art. 1 (2) Euroasia BIT because Mr. Explosive is a

natural person possessing the nationality of a Contracting Party. Mr. Explosive possesses

the nationality of Euroasia because (A) Fairyland´s secession was lawful and (B) the rules

on succession of states are applicable. Alternatively, (C) Mr. Explosive possesses the

nationality of Euroasia because he is “most closely connected” with Euroasia.

3 Statement of Uncontested Facts, para. 2. 4 Statement of Uncontested Facts, para. 2.

6

18. Accordingly, Mr. Explosive submits that the requirements set out in Art. 1 (2) Euroasia

BIT are satisfied. The Tribunal is therefore respectfully requested to dismiss any

jurisdictional objection Oceania may raise Ratione Personae and to declare that it has

competence Ratione Personae over the dispute.

A. Fairyland´s secession was lawful

19. Mr. Explosive submits that Fairyland´s secession was lawful because (1) the reunification

does not constitute an annexation and (2) the people of Fairyland have the right to self-

determination.

1. The reunification does not constitute an annexation

20. The reunification does not constitute an annexation because an annexation occurs only

when a state violently acquires a foreign territory against the will of the affected state.5

Euroasia did not use military force in its reunification with Fairyland and did not acquire

the territory against the will of the people.

21. Even if the armed forces of Euroasia entered the territory of Fairyland during the

reunification, Euroasia did not use any form of violence in acquiring the territory.

Moreover, both the authorities of Fairyland and the population at large desired the

reunification. This is evidenced, first, by an official letter sent by the Fairyland authorities

to the Minister of Foreign Affairs of Euroasia asking for an intervention, and second, by

the vote of the people.6

22. Thus, the request for intervention, the referendum on the secession of Fairyland, and the

official declaration of Fairyland being a part of the Euroasian territory, jointly preclude

an annexation.

5 Hofmann, para. 1; Fazal, para. 136 f.; Burke-White1, page 2; see also Burke-White2, generally; Akehurst,

generally; Gordon, generally. 6 Statement of Uncontested Facts, para. 14.

7

2. The people of Fairyland have the right of self-determination

23. Art. 1 (2) UN Charter stipulates the existence of a right of self-determination of peoples

by stating that it is the purpose of the UN

“[t]o develop friendly relations among nations based on respect for the

principle of equal rights and self-determination of peoples […]”.

24. The United Nations General Assembly (UNGA) Resolution 26257 further explains the

right of self-determination of peoples as

“all peoples hav[ing] the right freely to determine, without external

interference, their political status and to pursue their economic, social

and cultural development, and every State has the duty to respect this

right in accordance with the provisions of the Charter.”

25. Additionally, the principle of self-determination has been interpreted by Judge Nagendra

Singh in the Western Sahara Opinion as the

“[r]ight of the population [...] to determine their future political status by

their own freely expressed will.”8

26. Thus, it has been established that the right of self-determination of peoples is

acknowledged in international law and should be applied mutatis mutandis in this claim.

As a result, Mr. Explosive submits that the inhabitants of Fairyland lawfully asserted their

right of self-determination of peoples through the referendum and the subsequent

secession, because (i) they fulfil the requirements of being ‘peoples’ and (ii) their right to

secede is encompased in the right of self-determination.

(i) The residents of Fairyland are ‘peoples’

27. ‘Peoples’ was defined by the International Court of Justice in Kosovo9 by considering the

following elements: (1) whether the group shared the same ethnicity; (2) whether they

7 A/RES/25/2625; A/RES/ 2200A (XXI). 8 ICJ Western Sahara, Advisory opinion, ICJ GL No 61, 16 October 1975, page 101. 9 ICJ Reports of Judgements, Advisory Opinions and Orders, Accordance with International Law of the Unilat-

eral Declaration of Independence in Respect of Kosovo, 22 July 2010, page 80.

8

perceived themselves as a group; and (3) the length of time the group occupied the

territory in question.10 Moreover, the Supreme Court in Quebec made “clear that ‘a

people’ may include only a portion of the population of an existing state”.11

28. In the case at hand, the vast majority of Fairyland´s inhabitants clearly satisfy the Kosovo

requirements. First, the inhabitants are of Euroasian origin and therefore they share the

Euroasian ethnicity. Second, the 1 November 2013 referendum made clear that the

inhabitants do not identify with Eastasia and prefer to be reunited with Euroasia and

therefore view themselves as a distinct group of Euroasians in Eastasia. Third, the

inhabitants and their ancestors lived in Fairyland before it became a part of Eastasia, and

therefore, they occupied Fairyland for an extended period of time. Finally, the inhabitants

of Fairyland satisfy the Quebec stipulation of being an adequate “portion”12 of the

Eastasian population. Thus, Fairyland´s inhabitants are a ‘people’.

(ii) Fairyland´s right to secede is encompassed within the right of self-determination

29. First, the right to secede should have a broad scope of application. This is controversial,

since international law neither endorses nor explicitly prohibits the right to secede for

parts of states.13 Due to this regulatory gap, states must

“recognize the legitimacy of secession brought about by the exercise of

the well-established international law right of a people to self-

determination”.14

30. The ICJ, by endorsing the UNGA Resolution 2625,15 states that

“The establishment of a sovereign and independent State, the free

association or integration with an independent State […], freely

determined by a people constitute modes of implementing the right of

self-determination by that people.”16

10 Ibid, page 80. 11 Judgments of the Supreme Court of Canada, Reference re Secession of Quebec, [1998] 2 S.C.R. 217,

20 August 1998, para. 124. 12 Ibid. para. 124. 13 Ibid. para. 112; Roethke, page 38 citing Franck, in: Self-Determination in International Law: Quebec and

Lessons Learned, page 83. 14 Quebec, supra fn. 11, para. 111. 15 A/RES/25/2625. 16 ICJ Western Sahara, supra fn. 8, para. 58.

9

31. The UN recognises different approaches to the self-determination of peoples.17 In the

present case, the referendum in Fairyland carried out the ICJ´s approach, on the one hand

through the secession of Eastasia, on the other hand through the reunification with

Euroasia. The majority of Fairyland´s inhabitants voted in favour of both options.18 This

demonstrates that the referendum was a legitimate and democratic method through which

the people of Fairyland could exercise the right to self-determination.

32. Secondly, the requirements for a unilateral right to secede are fulfilled. While the

unilateral right to self-determination is still a subject of some controversy, Professor

Buchanan, an internationally recognized expert on the right to self-determination, has

advocated for a Primary Right Theory, which allows ‘peoples’ to secede solely on the

ground of being a distinct peoples having ascriptive characteristics.19 These encompass

“a common culture and […] many important aspects of life […] where

membership in the group is in part a matter of mutual recognition, is

important for one’s self-identification”.20

33. Furthermore, a people can establish its right to secede through a legitimate territorial

claim.21 Furthermore, other prominent scholars, such Mavrič, have advocated a theory

that a territorial claim can be found where the peoples have resided in the concerned

territory for a reasonably long time and where they have established a “connection to the

land”, in light of architectural and cultural aspects, as well as the “realization of their

common world” through institutions.22

34. Additionally, the legitimate claim on territory and therefore the “secessionist movements

can be based upon some sort of unjust historical occurrence”.23

35. Applying these principles to the case at hand, the inhabitants of Fairyland, undeniably,

fulfil the ascriptive characteristics identified by Buchanan. They speak the Euroasian

17 Ibid. 18 Statement of Uncontested Facts, para. 14; Procedural Order No. 3, para. 7. 19 Buchanan, page 379. 20 Buchanan, page 380. 21 Mavrič, page 147. 22 Ibid. 23 Brilmayer, page 190.

10

language,24 most of the inhabitants are of Euroasian origin25 and they clearly desire to

belong to the Euroasian culture.26 They form a unit of mostly originally Euroasian,

distinct people, having lived there for at least 100 years27 and being invested in the land

that they live on.

36. Furthermore, through the referendum and secession, Fairyland “seeks to right the

historical wrong”.28 The “unjust historical occurrence” derives from a war conflict

between Euroasia and Eastasia, in which Fairyland was included in Eastasian territory

against the will of the inhabitants, even though they identified with their ‘homeland’, i.e.

Euroasia.

37. As a result, Mr. Explosive submits that this “historical grievance”29 in combination with

the ethnic identity and cultural bond of the inhabitants of Fairyland establishes a territorial

claim on the land. Fairyland, as a distinct peoples, possess a “valid claim to the territory”30

and did “not unjustly violate the territorial integrity of the state.”31

38. As a result, Mr. Explosive submits that the people of Fairyland have the right to secede

from Eastasia and accordingly the rules on succession of states are applicable.

B. The rules on succession of states in international treaty law are observed

39. Mr. Explosive further submits that, according to the rules on succession of states in

international treaty law, he is a national of Euroasia.

24 Procedural Order 3, para. 9. 25 Ibid. 26 Uncontested Facts, para. 14. 27 Procedural Order 2, para. 4; Procedural Order 3, para. 9. 28 Brilmayer, page 191. 29 Ibid, page 190. 30 Mavrič, page 16. 31 Ibid.

11

1. Rules on succession of states concerning Euroasias amendment to its Citizenship

Act

40. The body of international law governing the rules on succession of states provides no

singular rule on individual nationality.32 Therefore, this question has been determined

through an analysis of customary international law. The UN Report on Nationality

clarifies international custom, emphasizing an obligation on the successor state to make

provisions for the regulation of nationality.33 That Report determined that, as a broad

customary rule,

“persons who were nationals of the predecessor State will [...] acquire

the nationality of the successor State only if they submit voluntarily to

its jurisdiction”.34

41. Congruently, Art. 4 of the Inter-American Convention on Nationality provides that:

“the inhabitants of [the] transferred territory must not consider

themselves as nationals of the State to which they are transferred, unless

they expressly opt to change their original nationality”.35

42. This kind of Opt Out Option may be considered customary treaty practice because it is

codified in several prominent peace treaties.36 Moreover, the Universal Declaration of

Human Rights states that “[n]o one shall be arbitrarily deprived of his nationality nor

denied the right to change his nationality”.37

43. In the present case, aligning with this custom, Euroasia introduced an amendment to its

Citizenship Act, which allowed all residents of Fairyland to apply for Euroasian

nationality and to opt out in order to change their former nationality.38 Pursuant to this

amendment, Mr. Explosive applied for Euroasian nationality and was issued a Euroasian

32 Dugan/Wallace/Rubins/Sabahi, page 306; Weis, page 99 f. 33 Hudson, page 9. 34 Ibid. 35 Montevideo, Art. 4. 36 Sudanese Comprehensive Peace Agreement; Treaty between Czechoslovakia and the U.S.S.R.; Peace Treaty

with Italy; Treaty of Athens. 37 Declaration of Human Rights of 1993, para. 2. 38 Procedural Order No. 2, para. 4.

12

identity card and passport on 23 March 2014.39 Therefore, Mr. Explosive´s application

was valid pursuant to Euroasia´s lawful amendment to its Citizenship Act.

2. Rules on succession of states concerning Eastasian Citizenship Law

44. According to the custom rules on succession of states in international treaty law,

“the acquisition of the nationality of the successor State does not

terminate ipso jure the nationality of the predecessor State [and]

withdrawal of its nationality depends on its municipal law.”40

45. Accordingly, on 2 March 2014, Mr. Explosive declared the renunciation of his Eastasian

citizenship. However, it did not comply with the described formal requirements of the

Eastasian Citizenship Law.41 Nevertheless, Mr. Explosive obviously declared his will to

renounce his Eastasian Citizenship, and in cases where the government is associating the

renunciation to “conditional unreasonable demands”,42 the renunciation should still be

effective. Therefore, the renunciation is effective.

46. Finally, Mr. Explosive submits that he does not possess dual nationality. Instead, he is a

national of Euroasia.

C. Alternatively, Mr. Explosive is a national of Euroasia, since he is “most closely

connected” to Euroasia

47. The question of nationality is primarily concerned with the prior nationality of Mr.

Explosive.43 Therefore, in either case, Mr. Explosive submits that he is effectively a

national of Euroasia. The genuine connection, commonly referred to as the principle of

effective nationality, enjoys broad consensus in both Tribunal and treaty based

international law.44 Although “the recognition is commonly in connection with dual

nationality, [...] the particular context of origin does not obscure its role as a general

39 Procedural Order No. 2, para. 4. 40 Declaration of Human Rights, para. 11. 41 Procedural Order No. 3, para. 2. 42 Faist, page 15. 43 See also: Soufraki v. United Arab Emirates, ICSID Case No. ARB/02/07 (Award of July 7, 2004), para. 55. 44 Blackman, page 1556; Brownlie/Crawford citing Magalhais v. Fernandes, Ann. Digest, 10 (1941-2), no. 83; In

re Heinz S, ibis. 11 (1919-42), no. 98.

13

principle.”45 This was applied for instance by the Tribunal in Champion Trading

Company, Ameritrade International, Inc. v. Arab Republic of Egypt as following:

“the principles of law generally recognised with regard to nationality

include the rule of effective nationality according to which a nationality

conferred by a State cannot produce effects unless it is effective and

corresponds to a genuine link between the State and the individual”46

48. This principle was established as landmark in Nottebohm where the ICJ found that the

rule of effective nationality can be established by determining the individual's “genuine

connection” to the state. Further, Art. 5 of the 1930 Hague Convention on Conflict of

Nationality Laws requires that

“within a third State, a person having more than one nationality shall be

treated as if he had only one. [...] a third State shall, of the nationalities

which any such person possesses, recognize exclusively in its territory

either the nationality of the country in which he is habitually and

principally resident, or the nationality of the country with which in the

circumstances he appears to be in fact most closely connected.”47

49. In the present case, Mr. Explosive´s close connection to Euroasia is unmistakable, both

intrinsically and by choice:

50. Firstly, Mr. Explosive is ethnically Euroasian. Historically, the region of Fairyland had

been part of the Republic of Euroasia. Mr. Explosive’s grandparents were born nationals

of Euroasia.

51. Secondly, Mr. Explosive does not identify as Eastasian. Mr. Explosive identifies as

Euroasian. His family has always fostered its Euroasian roots, and after the reunification,

Mr. Explosive applied for Euroasian nationality.

52. Thus, because Mr. Explosive is in fact most closely connected to Euroasia due to his

Euroasian ethnicity and self-identification. Mr. Explosive is a national of Euroasia.

45 Brownlie/Crawford, pages 513-514. 46 Champion Trading Company, Ameritrade International, Inc. v. Arab Republic of Egypt, ICSID Case No.

ARB/02/9, Decision on Jurisdiction, 21. October 2006, paras. 4-8; see also: Iran-US Claims Tribunal, Case No

A/18, 5 Iran-U.S.C.T.R. 251, 6 April 1984; Happ, paras. 904–905. 47 Hague Convention on Conflict of Nationality Laws, Art. 5.

14

53. For the reasons set forth in (A), (B) and (C) above, the denial of Mr. Explosive´s right to

choose Euroasian nationality violated international customary law and Mr. Explosive is

most closely connected to Euroasia. Therefore, Mr. Explosive respectfully requests that

this Tribunal consider him as a national of Euroasia and an investor pursuant to Art. 1 (2)

Euroasia BIT.

III. The MFN provision of the Euroasian BIT grants Mr. Explosive access to rely upon

the dispute resolution provisions of the Eastasia BIT

54. Mr. Explosive submits that he may invoke Art. 8 Eastasia BIT pursuant to Art. 3 Euroasia

BIT because (A) the MFN provision set out in Art. 3 Euroasia BIT extend to both

procedural and substantive provisions on dispute settlement in BITs; (B) Mr. Explosive’s

treatment under the Euroasia BIT is less favourable than the treatment accorded to

investors from Eastasia; (C) dispute settlement falls within the scope of the Euroasia

BIT’s MFN provision; and (D) the beneficiary of the MFN provisions is not able to

override public policy considerations.

A. The MFN provisions set out in Art. 3 Euroasia BIT extend to both procedural and

substantive provisions on dispute settlement

55. In past years, a debate has emerged regarding the possibility of applying MFN provisions

to jurisdictional issues. Today dispute settlement arrangements are inextricably related to

the protection of foreign investors. Thus, as established in Emilio Agustín Maffezini v. The

Kingdom of Spain the MFN provision extends to procedural provisions, as far as it is

concerned with the protection of these rights.48

48 ICJ Ambatielos, Greece v United Kingdom, Judgment, Preliminary Objection, [1952]

ICJ Rep 28, ICGJ 189 (ICJ 1952), 1st July 1952, para. 106; Emilio Agustín Maffezini v. The Kingdom of Spain,

ICSID Case No. ARB/97/7, Decision of the Arbitral on Objections to Jurisdiction, 25 January, 2000, para. 117;

Salini Costruttori S.p.A. and Italstrade S.p.A. v. Kingdom of Morocco, ICSID Case No. ARB/00/4, Decision

on Jurisdiction, 31 July 2001, para. 118.

15

56. Contrary, Oceania´s view refers to the principle on which the Plama Tribunal reached its

conclusion, and on which also the Tribunals in Telenor49 and Wintershall50 relied, namely

that:

“an MFN provision in a basic treaty does not incorporate by reference

dispute settlement provisions in whole or in part set forth in another

treaty, unless the MFN provision in the basic treaty leaves no doubt that

the Contracting Parties intended to incorporate them.”51

57. Nevertheless, Plama´s narrow interpretation of an MFN provision is not sufficient in this

case because, like in RosInvest52, the case at hand deals with an obviously more

favourable provision regarding Mr. Explosive´s recourse to a government's interference

with the “use” and “enjoyment” of an investment. Moreover, contrary to the MFN

provision in the present case, Plama, Berschader and Wintershall have mostly been

concerned with MFN Clauses that explicitly denied an extend to jurisdiction.53

1. The broad interpretation of MFN in previous case law

58. Therefore, the more justifiable approach requires a broad interpretation of the MFN

provision that allows the investor to extend the MFN treatment to dispute settlement

matters. The ICSID’s Maffezini decision initially determined the need for this broad

application of MFN provisions. In this case Maffezini invoked the MFN provision in order

to sidestep or circumvent an 18 months local remedies requirement.54Maffezini

particularly noted that dispute settlement provisions in BITs are “essential to the

protection of the rights envisaged under the pertinent treaties” because they are “closely

linked to the material aspects of the treatment accorded.”55 Accordingly, a sufficiently

49 Telenor Mobile Communications AS v. Hungary, Award, ICSID Case No ARB/04/15, 13 September 2006. 50 Wintershall Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/04/14, Award, 8 December

2008, para. 160. 51 Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Decision on Jurisdiction, 8

February 2005, paras. 183-184, 220 f. 52 RosInvest Co. UK Ltd v. Russia, SCC Case No. 079/2005, Award on Jurisdiction, 1 October 2007, para. 130. 53 Wintershall Aktiengesellschaft v. Argentine Republic, supra fn.50, para. 160. 54 Maffezini v. Spain, supra fn. 48. 55 Maffezini v. Spain, supra fn. 48, para. 55.

16

large number of awards were following the Maffezini approach and lead to an innovative

interpretation of the MFN provisions.56

59. Moreover, a “provision for international investor-state arbitration in bilateral investment

treaties is a significant substantive incentive and protection for foreign investors”.57 In

the RosInvest case, the SCC Tribunal emphasized the need for a broad application of the

MFN provisions because

“the submission to arbitration forms a highly relevant part of the

corresponding protection for the investor by granting him, in case of

interference with his ‘use’ and ‘enjoyment’, procedural options of

obvious and great significance compared to the sole option of

challenging such interference before the domestic courts of the host

state.”58

60. And, according to the Tribunal in Siemens, the term “treatment” in MFN provision was

sufficiently broad to include settlement disputes.59 Therefore, insofar as “the

administration of justice” is concerned with the protection of the rights of the investor,

procedural elements must fall within the scope of the MFN provisions.60

61. In the case at hand, the wording of the MFN provisions set out in Art. 3 (1) Euroasia BIT,

which refers to “investment matters regulated by this Agreement” and “treatment”, is

broad enough to include procedural matters, because both terms, similar to Maffezini, do

not specifically exclude dispute settlement provisions. Rather, both terms remain open to

a broad interpretation.

62. Further, the protection of Mr. Explosive´s rights is “closely linked” to the dispute

settlement provision in the Euroasia BIT. Therefore, procedural questions must fall within

the scope of Euroasia´s MFN provision. Hence, Maffezini´s broad application of the MFN

provision requires that procedural as well as jurisdictional questions fall within the scope

of Euroasia´s MFN provision.

56 Gas Natural SDG, S.A. v. The Argentine Republic, ICSID Case No. ARB/03/10, Decision on Jurisdiction, 17

June 2005, para. 31; Siemens A.G. v. The Argentine Republic, ICSID Case No. ARB/02/8, Award, 17 January

2007, paras. 102-103. 57 Gas Natural v. Argentina, supra fn. 52, para. 31. 58 RosInvest, supra fn. 52. 59 Siemens v. Argentina, supra fn. 56, para. 102-103. 60 ICJ Ambatielos, supra fn. 48, p. 107.

17

2. The Interpretation of MFN Treatment in the Euroasia BIT

63. According to prevalent literature, the question whether the explicit MFN treatment does

extend to procedural provisions seems to depend on “proper interpretative approach” of

the BIT at hand.61 Further, in order to detect the intentions of the negotiating parties, “the

exact wording of dispute resolution clauses plays a key role”.62 Thus, it is generally

accepted that the MFN provision in question must be interpreted in accordance with the

principles of treaty interpretation, as codified in the VCLT Art. 31 (1).63 Art. 3 Euroasia

BIT must be

“interpreted in good faith in accordance with the ordinary meaning to be

given to the terms of the treaty in their context and in the light of its

object and purpose.”64

64. Further, Art. 3 (2) Euroasia BIT generally states:

“Each Contracting Party shall, within its own territory, accord to

investments made by investors of the other Contracting Party […]

a treatment that is no less favourable than that accorded to its own

investors or investors from third-party countries [and] advantages and

privileges […] that derive from its membership in a customs or economic

union, common market, or free trade area, or as a result of regional or

subregional agreements, multilateral international agreements or double

taxation agreements, or any other tax-related arrangements or

agreements to facilitate cross border trade [shall not apply].”

65. Firstly, Art. 3 (2) Euroasia BIT specifically excludes the latter exceptions from the scope

of the MFN provision. However, the wording of Art. 3 (2) does not specifically exclude

procedural provisions on dispute settlement. In case the parties had actually intended to

exclude dispute settlement provisions from the scope of the MFN provision, they would

have distinctly excluded it. Therefore, the language of the Euroasia BIT shows that the

Contracting State Parties intended for the MFN provisions to apply to dispute settlement

measures. Thus, dispute settlement falls within the scope of the Euroasia BIT’s MFN

provision.

61 Schill, page. 353. 62 Daimler Financial Services AG v. Argentine Republic, ICSID Case No. ARB/05/1, Award, 22 August 2012,

para. 161. 63 OECD (2004); Maupin, pages 157-190. 64 VCLT, Art. 31 (1).

18

66. Secondly, the protection of Mr. Explosive´s rights is “closely linked” to the dispute

settlement provision in the Euroasia BIT. Therefore, procedural questions must fall within

the scope of Euroasia´s MFN provision. Hence, Maffezini´s broad application of the MFN

provision requires that procedural, as well as jurisdictional questions shall fall within the

scope of Euroasia´s MFN provision.

B. Mr. Explosive’s treatment under the Euroasia BIT is less favourable than the

treatment accorded to investors from Eastasia

67. The ICSID Tribunal in Impregilo held that “a system that gives a choice [of dispute

settlement] is more favourable to the investor than a system that gives no choice.”65

Obviously,

“access to [international] arbitration only after resort to national courts

[...] is a less favourable degree of protection than access to arbitration

immediately upon expiration of the negotiation period”.66

68. Moreover, according to Maffezini, it is more favourable to have the merits of the dispute

settled by international arbitration rather than by a domestic court because

”traders and investors [...] have traditionally felt that their rights and

interests are better protected by recourse to international arbitration than

by submission of disputes to domestic courts, while the host

governments have traditionally felt that the protection of domestic courts

is to be preferred.”67

69. Art. 3 Euroasia BIT grants Mr. Explosive a “treatment that is no less favourable than that

accorded to [Oceania’s] investors or investors from third-party countries.” In the case at

hand, Mr. Explosive submits that, it would be more favourable for him to have a choice

of fora for arbitration because the Oceanian national courts may not adjucate his claims

under the protection of the BIT.68 Indeed, in order to resort a claim by international

arbitration, signatories to the Euroasia BIT must submit their claim to the competent

65 Impregilo S.p.A. v. The Argentine Republic, ICSID Case No. ARB/07/17, Award 21 June 2011, para. 101. 66 Gas Natural v. Argentina, supra fn. 56, para. 31. 67 Maffezini v. Spain, supra fn. 48, para. 55. 68 Procedural No. 3, paras. 5-6.

19

judicial or administrative courts of the Contracting Party in whose territory the investment

is made. Art. 9 (2), (3) Euroasia BIT stipulates:

“If the dispute cannot be settled amicably, it may be submitted to the

competent judicial or administrative courts of the Contracting Party

in whose territory the investment is made. Where, after twenty four

months from the date of the notice on the commencement of

proceedings before the courts mentioned in paragraph 2 above, the

dispute between an investor and one of the Contracting Parties has not

been resolved, it may be referred to international arbitration.”69

70. Compared to this, Signatories to the Eastasia BIT are granted a choice of fora in the

settlement of disputes from the outset. Art. 8 (2) Eastasia BIT stipulates:

“If the dispute cannot be settled amicably within six months, it shall, at

the request of an investor of the other Contracting Party, be submitted

to arbitration.”70

71. Due to the choice of fora, Eastasia´s investors are treated more favourably than Euroasia´s

investors because it is more favourable to have the merits of the dispute settled by

international arbitration rather than by a domestic court.71

72. Thus, Mr. Explosive may invoke Art. 8 Eastasia BIT, because otherwise Oceania would

treat him less favourably than investors from third-party countries that can rely on an

obviously more favourable provision.

C. Dispute settlement falls within the scope of the Euroasia BIT’s MFN provision

73. Dispute settlement falls within the scope of the Euroasia BIT’s MFN provision, because

Art. 3 (2) Euroasia BIT excludes the following from the scope of the MFN provision:

“advantages and privileges accorded by either Contracting Party to any

third country by virtue of that Party’s binding obligations that derive

from its membership in a customs or economic union, common market,

or free trade area, or as a result of regional or subregional agreements,

multilateral international agreements or double taxation agreements, or

69 Art. 9 (2) Euroasia BIT; Art. 9 (3) Euroasia BIT, emphasis added. 70 Art. 8 (2) Eastasia BIT, emphasis added. 71 Maffezini v. Spain, supra fn. 48, para. 55.

20

any other tax-related arrangements or agreements to facilitate cross

border trade”.

74. Moreover, none of the aforementioned exceptions are applicable in the present case.

“The failure to refer among these excluded items to any matter remotely

connected to dispute settlement reinforces the interpretation that the term

‘[investment] matters’ in [Art. 3 (1) Euroasia BIT also] includes dispute

settlement matters.”72

75. Therefore, dispute settlement falls within the scope of the Euroasia BIT´s MFN provision.

D. The MFN provision does not violate public policy

76. The extension of the MFN provisions to dispute settlement matters “might result in [...]

harmonization and enlargement of the scope of such arrangements” in relation to

investment treaties.73 Although, the Tribunal in Maffezini pointed out that

“the beneficiary of the clause should not be able to override public policy

considerations that the contracting parties might have envisaged as

fundamental conditions for their acceptance of the agreement in

question”.74

77. However, Mr. Explosive submits that in the present case no public policy consideration

that the parties might have envisaged would be overridden by extending the MFN

provision to dispute settlement matters.

78. Firstly, invoking ICC arbitration by reliance on the MFN provision is not “reflect[ing] a

fundamental question of public policy”75. Neither the Euroasion nor the Eastasia BIT

generally exclude the access to ICC arbitration. Thus, neither BIT contains a “fork-in-

72 Suez, Sociedad General de Aguas de Barcelona S.A., and InterAguas Servicios Integrales del Agua S.A. v. The

Argentine Republic, ICSID Case No. ARB/03/17, Decision on Jurisdiction, 16 May 2006, paras. 55–56; see

also: MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Award, 25 May

2004, para. 104. 73 Maffezini v. Spain, supra fn. 48, para. 62. 74 Maffezini v. Spain, supra fn. 48, para. 62. 75 Reinisch, page 20.

21

the-road”76 and further no fundamental principles that could be considered as public

policy is overridden.

79. Secondly, both the Eastasia BIT and the Euroasia BIT expressly state the intention to

provide “stable conditions for investments” and to “promote greater economic

cooperation”. Also, both treaties were concluded under the same political conditions

because both treaties were concluded on 1 January 1992.

80. As a result, the MFN provision, in the case at hand, cannot be interpreted to grant a

beneficiary the right to override public policy considerations.

81. In sum, Mr. Explosive is not required to comply with the pre-arbitral steps under

Art. 9 Euroasia BIT because Mr. Explosive may invoke Art. 8 Eastasia BIT pursuant to

Art. 3 Euroasia BIT.

E. In case the Tribunal finds that Mr. Explosive is considered as a national from

Eastasia, Mr. Explosive may nevertheless invoke Art. 8 Eastasia BIT

82. As Eastasian national Mr. Explosive may also invoke Art. 8 Eastasia BIT because he

complied with the pre-arbitral steps required in Art. 8 (1) and (2) of the Eastasia BIT.77 In

either case, Mr. Explosive legally raised his claims before the ICC.

IV. Mr. Explosive made a protected investment notwithstanding the Clean Hands

Doctrine

83. Contrary to Oceania's assertions, Oceania cannot deny the access upon the dispute

resolution provisions of the Eastasia BIT by virtue of the Clean Hands Doctrine codified

in Art. 1 (1) Eastasia BIT. In fact, Mr. Explosive did not violate the Clean Hands Doctrine

because (A) the Clean Hands Doctrine is not applicable; (B) even if it were applicable,

mere allegations without evidence are not sufficient; and (C) Oceania’s allegations lack

timely relevance regarding the ‘investment’.

76 Ibid. 77 Procedural Order No. 3, para. 4.

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A. The Clean Hands Doctrine is not applicable

1. The Clean Hands Doctrine is not implicated in the Euroasia BIT

84. In his claim, Mr. Explosive, as a Euroasian national, relies on the Euroasia BIT, which

therefore sets out the primary legal source. The Euroasia BIT does not explicitly contain

a Clean Hands Doctrine.

85. Furthermore, based on the Tribunal’s decision in Yukos Universal Limited (Isle of Man)

v. The Russian Federation, it is not persuasive

“that there is a general principle of law recognized by ‘civilized nations’

within the meaning of Article 38 (1) (c) of the ICJ Statute that would bar

an investor from making a claim before an arbitral tribunal under an

investment treaty because it has so-called ‘unclean hands’.”78

86. For this reason, since there is no general principle of the Clean Hands Doctrine enshrined

in international law, it cannot be assumed that the Euroasia BIT is governed by such

underlying general principle. Consequently, the Euroasia BIT does not contain a Clean

Hands Doctrine, neither explicitly nor implicitly.

2. The Clean Hands Doctrine of Art. 1 (1) Eastasia BIT does not affect access to Art. 8

Eastasia BIT

87. Art. 1 (1) Eastasia BIT refers to investments “invested by an investor of

[Eastasia/Oceania] in the territory of [Oceania/Eastasia] in accordance with the laws”. It

clearly does not include nationals of Euroasia. Thus, the Clean Hands Doctrine set out in

Art. 1 (1) Eastasia BIT is not directed at Euroasian nationals.

88. As established above,79 Mr. Explosive submits that the Tribunal should view him as an

Euroasian national. Even if he has multiple nationalities, under this claim, Mr. Explosive

is indisputably Euroasian and the provision above is not directed at him.

78 Yukos Universal Limited (Isle of Man) v. The Russian Federation, PCA Case No. AA 227, Interim

Award on Jurisdiction and Admissibility, 30 November 2009, para. 1358. 79 para. 33 and 36.

23

89. Consequently, he rightfully invokes Art. 8 Eastasia BIT and is not affected by the Clean

Hands Doctrine.

B. Even if it were applicable, mere allegations without evidence are not sufficient

90. Even if the Tribunal decides to apply the Clean Hands Doctrine and considers the

evidence submitted by Oceania, factual evidence for bribery and mere allegations do not

fulfil the requirements for a breach.

91. As stated in Art. 27 (1) UNCITRAL Arbitration Rules,

“Every party shall have the burden of proving the facts relied on to

support its claim or defence.”

92. Oceania alleges that Mr. Explosive bribed the President of the NEA and participated in

corruption. Oceania carries the burden of proof for this allegation because it submitted

the claim.

93. “The seriousness of the accusation of corruption [...] demands clear and convincing

evidence”,80 as the ICSID pointed out in EDF vs. Romania. Furthermore, the ICC

Tribunal in Hilmarton specified that

“it is necessary that a sufficient ensemble of indirect evidence be

collected to allow the judge to base his decision on something more than

likely facts, i.e., facts which have not been proven.”81

94. In the case at hand, the only known criminal actions against Mr. Explosive are the

proceedings initiated by the General Prosecutor’s Office on 23 June 2015, which remain

pending. As evidence in these proceedings, Oceania submits that the President of the NEA

is willing to testify against Mr. Explosive, regarding him allegedly bribing the President

in order to obtain his licence. However, in the case of testimony, the President negotiated

a non-prosecution agreement with the General Prosecutor. Thus, his credibility must be

questioned and Oceania should not solely rely on his biased claim.

80 EDF (Services) Limited v. Romania, ICSID Case No. ARB/05/13, Award, 8 October 2009, para. 221. 81 Hilmarton. Ltd v. Omnium de Traitement et de Valorisation, ICC Award No. 5622, 10 April 1992, para. 23.

24

95. As convincingly shown, Oceania neither presented any “clear and convincing”82 evidence

nor a “sufficient ensemble of indirect evidence”.83 For Oceania to base the claim merely

on circumstantial evidence is defamatory to Mr. Explosive and leads to prejudgment.

Additionally, it is absurd to let Oceania make a claim based on a testimony of their own

corrupt official. This misdemeanour should not aid Oceania in their defence against Mr.

Explosive.

96. Corruption is a criminal offence. Thus, general principles of criminal law should be

considered in these matters. The principle of in dubio pro reo is reflected in the ICJ

Statute. Art. 66 (1) stipulates that “[e]veryone shall be presumed innocent until proved

guilty before the Court.” Endorsing this principle, Mr. Explosive submits that the Tribunal

should attach a high threshold to the evidence before it presumes guilt. In the case at

hand, Oceania’s evidence lacks sufficiency to meet this threshold. Therefore, Mr.

Explosive shall be presumed innocent.

97. Clearly, Mr. Explosive could not suspect any illegality in the process of obtaining the

licence, even though the production line de facto complied with the requirements for

obtaining the licence in 2014. Mr. Explosive submits that the NEA, by issuing the licence

in July 1998, led him to believe that he obtained the licence legally. Particularly, Mr.

Explosive was in good faith, because the legality of the licence was never questioned nor

revoked by the authorities.

C. Oceania’s allegations lack timely relevance regarding the ‘investment’

According to Jarrod Hepburn, analysing MetalGeo v Georgia, “any non-compliance that

would violate the Clean Hands Doctrine “must be assessed at the time of making the

investment.”84

98. Indeed, there is absolutely no evidence that before or at the time of purchasing the shares,

Mr. Explosive violated Oceanian law. Mr. Explosive purchased the shares in February

82 Ibid. 83 Ibid. 84 See Hepburn, generally.

25

1998. However, Oceania’s submission relies on the obtainment of the licence in July

1998, which occurred significantly after making the investment.

99. As a result, the investment was indisputably made in accordance with the Oceanian laws

as required by Art. 1 (1) Eastasia BIT.

100. For the reasons set forth in (A) and (B), the Clean Hands Doctrine codified in Art. 1 (1)

Eastasia BIT does not apply to Mr. Explosive. Even if it were applicable, Mr. Explosive’s

actions did not constitute a violation. Therefore, the Tribunal cannot deny access to the

dispute resolution provisions of the Eastasia BIT.

CONCLUSION ON JURISDICTION

101. The Tribunal is requested to find that it has jurisdiction over the present dispute. Firstly,

Mr. Explosive fulfils the requirements Ratione Materiae as well as Ratione Personae for

purposes of ICC jurisdiction. Mr. Explosive is in fact a national of Euroasia, and

accordingly, he can invoke the Euroasia MFN provision in order to access the dispute

settlement provisions of the Eastasia BIT; and, Mr. Explosive can invoke the dispute

settlement provisions of the Eastasia BIT in any case. Secondly, Mr. Explosive did not

violate the Clean Hands Doctrine, Art. 1 (1) Eastasia BIT. Finally, Mr. Explosive raises

his claims in accordance with the relevant BITs. Therefore, this Tribunal has jurisdiction

to adjucate the present dispute.

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PART III: MERITS

102. Mr. Explosive respectfully requests that this Tribunal find that (I) Oceania indirectly

expropriated Mr. Explosive’s property for the following reasons. Alternatively, (II)

Oceania breached its obligation to provide the standard of fair and equitable treatment to

Mr. Explosive´s investment pursuant to Art. 2 (2) Euroasia BIT. And, finally, (III) the

damage Mr. Explosive suffered did not exacerbate Mr. Explosive´s actions nor did Mr.

Explosive fail to mitigate damages.

I. Oceania’s Actions Constitute an Indirect Expropriation of Mr. Explosive´s Lawful

Investment

103. Mr. Explosive contends that an indirect expropriation occurred because of the sanctions

implemented by the Executive Order of 1 May 2014. Expropriation is generally defined

as taking or deprivation of a property of foreign investors by a host state. Further the

Tribunal in CME Czech Republic B.V. v. The Czech Republic characterises indirect

expropriation as

“measures that do not involve an overt taking but that effectively

neutralize the benefit of the property of the foreign owner”.85

104. Moreover, previous case law recognizes several criteria that are used to identify an

indirect expropriation. These criteria are further elucidated in the following subsections:

105. (A) Mr. Explosive was effectively deprived of an economic benefit he “reasonably

expected”. (B) Oceania deprived Mr. Explosive of a “substantial” part of the value of

Rocket Bombs Ltd (C) A broad Interpretation of the scope of Art. 4 Euroasia BIT is

warranted. (D) Oceania´s actions significantly interfere with Mr. Explosive´s property

rights. (E) Oceania´s Executive Order is not proportionate to the “aim sought to be

realized”. (F) Mr. Explosive held a “legitimate expectation” that his investment would be

protected under the BIT for a period of at least twenty years.

85 CME Czech Republic B.V. v. The Czech Republic, UNCITRAL, Partial Award, 13 September 2001, para. 604.

27

A. Mr. Explosive was effectively deprived of an economic benefit

106. According to Metalclad Corporation v. The United Mexican States, indirect expropriation

will occur when measures taken by the host state have

“the effect of depriving the owner, in whole or in significant part, of the

use or reasonably-to-be-expected economic benefit of property”.86

107. Moreover, the Tribunal in CME also confirmed that indirect expropriation is also a

measure that does not necessarily “involve an overt taking, but that effectively neutralized

the benefit of the property”.87

108. Furthermore, the Iran-U.S. Claims Tribunal has frequently stated that “[t]he intent of the

government [concerning expropriation] is less important than the effects of the measures

on the owner”.88 Additionally, according to a more recent publication from the U.N.

Conference on Trade and Development, “indirect expropriation may occur even though

the host country disavows any intent to expropriate the investment”.89

109. Mr. Explosive submits that, in the present case, the Executive Order effectively

neutralized Mr. Explosive´s “enjoyment” of Rocket Bombs Ltd even though it did not

constitute an actual overt taking.

110. It is undisputed that, due to the Executive Order: (1) Mr. Explosive became unable to sell

his shares in Rocket Bombs Ltd,90 (2) the value of the shares was reduced to almost zero91

and (3) as a result of the Executive Order, Rocket Bombs Ltd was unable to meet any of

its contractual obligations towards entities from outside Oceania because all suppliers of

Rocket Bombs Ltd operated within the territory of Oceania.92

86 Metalclad Corporation v. The United Mexican States, ICSID Case No. ARB(AF)/97/1, Award, 30 August

2000, para. 103. 87 CME Czech Republic B.V. v. The Czech Republic, supra fn. 85, para. 604. 88 Iran-United States Claims Tribunal, Tippets, Abbett, McCarthy, Stratton v. TAMS-AFFA Consulting Engineers

of Iran, Case No 7, Award No. 141-7-2, 6 Iran-US C.T.R 219, 29 June 1984 paras. 225–6; Iran-United States

Claims Tribunal, Int'l Sys. & Control Opera-tions v. Indus. Dev. and Renovation Org., 12 Iran-US CTR 239,

1986, para. 97; Iran-United States Claims Tribunal, Payne v. Government of the Islamic Republic of Iran, Award

No. 245-335-2, 12 Iran-US CTR 3, 8 August, 1986, para. 22; Iran-United States Claims Tribunal, Phelps Dodge

International Corporation v. The Islamic Republic of Iran, Case No. 99 (1986) 10 US CTR 121, para. 22. 89 UNCTAD, Bilateral Investment Treaties, page. 66. 90 Statement of Uncontested Facts, para. 17. 91 Request for Arbitration, page 3. 92 Statement of Uncontested Facts, para. 16.

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111. Thus, taking these facts together, it is clear that the measures taken by the Oceanian

government substantially impaired the value of Mr. Explosive´s investment, even though

Oceania did not assume ownership of the investment. Accordingly, Oceania deprived

Mr. Explosive of an economic benefit.

B. Oceania deprived Mr. Explosive of a “substantial” part of the value of

Rocket Bombs Ltd

112. Many recent investment claims decisions mirror Pope & Talbot´s holding that

“for any expropriation [...] to occur, the state must deprive the investor

of a ‘substantial’ part of the value of the investment.”93

113. The ICSID in CMS established the concept of “substantial deprivation” to pinpoint the

level of deprivation by a government sufficient to constitute a taking.94 The ICSID

Tribunal in Tokios Tokelés v. Ukraine clarified that, in determining substantiality, a

diminution of 5% of an investment’s value is not enough for a finding of expropriation,

but a diminution of 95% is likely sufficient.95

114. In the case at hand, the value of Mr. Explosive´s shares in Rocket Bombs Ltd was reduced

to almost zero.96 Hence, Mr. Explosive suffered a diminution of almost 100%, well

beyond Tokios “substantiality” threshold of 95%. An almost 100% diminution in value

clearly satisfies CMS´s “substantial deprivation” standard for expropriation.

C. A broad Interpretation of the Scope of Art. 4 Euroasia BIT is warranted

115. Furthermore, Art. 4 Euroasia BIT requires a broad reading of the scope of government

measures that are “tantamount to expropriation” over and above the classic requirements

for indirect expropriation.

93 Pope & Talbot Inc. v. The Government of Canada, UNCITRAL, Interim Award, 26 June 2000, para. 96, 102;

CMS v. Argentine, para. 262; Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB

(AF)/00/3, Award, 30 April 2004, para. 155; Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18

para. 120. 94 CMS Gas v. Argentina, supra fn. 93, para. 262. 95 Tokios Tokelés v. Ukraine, supra fn. 93, para 120. 96 Request for Arbitration, page 3; Statement of Uncontested Facts, para. 17.

29

116. Art. 4 (1) Euroasia BIT provides that:

“Investments by investors of either Contracting Party may not directly

or indirectly be expropriated, nationalized or subject to any other

measure the effects of which would be tantamount to expropriation

or nationalization in the territory of the other Contracting Party except

for the public purpose.”

117. The ICSID in Waste Management pointed out that the wording “tantamount to

expropriation” expressly relates to expropriation in cases where,

“there may have been no actual transfer, taking or loss of property […]

but rather an effect on property which makes formal distinctions of

ownership irrelevant”.97

118. At the minimum, Oceania must acknowledge the Feldman Tribunal´s determination that

“indirect expropriation” and “tantamount to expropriation” are “functionally

equivalent”.98

119. However, Waste Management makes clear that the wording “tantamount to

expropriation”, in addition to an explicit reference to indirect expropriation, was

“intended to add to the meaning of the prohibition, over and above the reference to

indirect expropriation”.99

120. As a result of this wording in the Euroasia BIT, it is irrelevant whether the term “indirect

expropriation” is interpreted broadly or narrowly. In either case, the wording of

Art. 4 Euroasia BIT is clearly intended to include cases in which governmental measures

have effects that would be “tantamount to expropriation”. As mentioned above, the

Executive Order effectively neutralized the economic benefit of Rocket Bombs Ltd even

though it did not constitute an actual overt taking. Thus, the Executive Order is

“tantamount to expropriation”.

97 Waste Management v. Mexico, supra fn. 93, para. 143. 98 Marvin Roy Feldman Karpa v. United Mexican States, ICSID Case No. ARB(AF)/99/1, para. 100. 99 Waste Management v. Mexico, supra fn. 93, para. 143.

30

121. Accordingly, Mr. Explosive submits that Art. 4 Euroasia BIT requires that the Arbitral

Tribunal consider Oceania´s Executive Order to either be an “indirect expropriation” or

“tantamount to expropriation” of Mr. Explosive´s investment.

D. Oceania´s Executive Order significantly interferes with Mr. Explosive´s property

rights

122. Even if an almost 100 % diminution in value was not “substantial”, the ICSID in Feldman

v. Mexico stated that both, indirect expropriation and measures tantamount to

expropriation

“potentially encompass a variety of government regulatory activity that

may significantly interfere with an investor’s property rights.”100

123. Indeed, it is to determine

“when governmental action that interferes with [...] property rights [...]

crosses the line from valid regulation to a compensable taking”.101

124. In order to distinguish between valid regulation and compensable taking, again, the effect

of the governmental action needs to be examined. To this end, the American Arbitration

Association in Revere Copper pointed out that a governmental action is more likely to be

identified as a compensable taking where the investor is no longer in “effective control”

over his property.102

125. In the case at hand Rocket Bombs Ltd was unable to meet any of its contractual

obligations, as a result of the Executive Order. Mr. Explosive could neither conduct the

business, nor sell it.103

126. Consequently, Mr. Explosive could not exercise effective control over his investment

because he could not fulfill any of its contractual obligations, indeed, he could not even

conduct its business. Moreover, Mr. Explosive did not even have control over the decision

100 Feldman v. Mexico, supra fn. 98, para. 100. 101 Feldman v. Mexico, supra fn. 98, para. 100. 102 Revere Copper & Brass, Inc. v. OPIC, 17 ILM 1978, para. 291. 103 Statement of Uncontested Facts, para. 17.

31

whether to sell his investment; that decision too was wrested from him by the complete

devaluation of his shares as a result of Oceania’s actions. Hence, Oceania´s governmental

actions significantly interfered with Mr. Explosive´s property rights and therefore

constitute a compensable taking rather than a valid governmental regulation.

E. Oceania´s actions are not proportionate to the aim sought to be realized

127. Referring to recent judgements rendered by the European Court of Human Rights

(“ECtHR”), the ICSID Tribunal in Técnicas Medioambientales Tecmed, S.A. v. The

United Mexican States found that

“there must be a reasonable relationship of proportionality between the

charge or weight imposed to the foreign investor and the aim sought to

be realized by any expropriation measure.”104

128. The same test of proportionality was applied in the ICSID case Azurix Corp. v. The

Argentine Republic.105 In both cases the question arose whether a regulatory measure

could lead to a claim for compensation. In particular, the Tribunal in Tecmed particularly

referred to the case of James and Other, which defined compensable circumstances as

follows:

“Not only must a measure depriving a person of his property pursue, on

the facts as well as in principle, a legitimate aim « in the public interest

», but there must also be a reasonable relationship of proportionality

between the means employed and the aim sought to be realised.”106

129. Thus, Mr. Explosive respectfully requests that the Tribunal apply a proportionality test

that balances the governmental actions and the “aim sought to be realized” in relation to

the damages suffered. Art. 4 (1) Euroasia BIT notes the “public purpose” as the only

exception and legitimate aim to deprive an investor of his property.

104 European Court of Human Rights, In the case of Mellacher and Others v. Austria, judgment of December 19,

1989, 48, page 24; In the case of Pressos Compañía Naviera and Others v. Belgium, judgment of November

20, 1995, para. 38; Técnicas Medioambientales Tecmed, S.A. v. The United Mexican States, Award, para. 122. 105 Azurix Corp. v. The Argentine Republic, ICSID Case No. ARB/01/12 para. 311. 106 European Court of Human Rights, In the case of James and Others, judgment of February 21, 1986, 50,

pages 19-20.

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130. However, Oceania claims in its Executive Order that

“the actions and policies of the Government of the Republic of Eurasia,

[…] continue to undermine democratic processes and institutions in the

Republic of Eastasia; threaten its peace, security, stability, sovereignty,

and territorial integrity; and contribute to the misappropriation of its

assets, and thereby constitute an unusual and extraordinary threat to the

national security and foreign policy of the Republic of Oceania.”107

131. Hereby, Oceania is making several strong allegations. And were these strong allegations

true, it may seem as if the Executive Order was necessary to fulfil a “public purpose”.

132. Nevertheless, because the actual dispute is primarily between Euroasia and Eastasia, and

does not involve Oceania, there is no “unusual and extraordinary threat to the national

security and foreign policy of the Republic of Oceania.” Instead, Oceania is imposing

economic sanctions in order to punish Euroasia. As a result, the Executive Order´s

allegations are outrageous and disproportionate.

133. Moreover, the Executive Order is not reasonable in the “aim sought to be realized”,

because it is not a legitimate aim to punish Euroasia, for exercising a right, and the

measures adopted to accomplish this illegitimate aim are preventing Mr. Explosive from

conducting his business at all. Due to the Executive Order, all entities operating in the

territory of the Republic of Oceania are prohibited to supply Rocket Bombs Ltd. Thus,

the Executive Order detained Mr. Explosive not only from exporting his goods to

Euroasia, but also to any other entity. Consequently, in relation to the damages, the

governmental actions are not proportionate to the “aim sought to be realized”.

134. Moreover, Oceania cannot plead for its “Essential Security Interest”. Indeed Art. 10

Euroasia BIT states:

“Nothing in this Agreement shall be construed to prevent either

Contracting Party from taking measures to fulfil its obligations with

respect to the maintenance of international peace or security.”

107 Executive Order of 1 May 2014.

33

However, as demonstrated above, there are no identifiable reasons illustrating how

depriving Mr. Explosive of his property could actually pursue the legitimate aim of

obtaining Oceania´s peace, security, stability, sovereignty and territorial integrity.

135. Quite to the contrary, the reunification with Euroasia itself was peaceful because the

majority of Fairyland residents do not identify with Eastasia and therefore even preferred

a reunification.108 Moreover, contrary to the claims of the Executive Order, the people of

Fairyland were not undermining democracy. Rather, the people were exercising their right

to self-determination, and thus, were actually accomplishing democracy in the clearest

way available.

136. Therefore, because the Executive Order clearly does not accomplish “peace, security,

stability, sovereignty, and territorial integrity,” and because it consistently deprives

Mr. Explosive of his property, it does not constitute a “reasonable relationship of

proportionality between the means employed and the aim sought to be realised”.109

F. Mr. Explosive held a “legitimate expectation” that his investment would be

protected under the BIT for a period of at least twenty years

137. Mr. Explosive further submits that the Executive Order has interfered with his legitimate

expectations as an investor. The Tribunal in Thunderbird Gaming Corp. v Mexico defined

the principle of legitimate expectations as follows:

“the concept of “legitimate expectations” relates [...] to a situation where

a Contracting Party’s conduct creates reasonable and justifiable

expectations on the part of an investor (or investment) to act in reliance

on said conduct”.110

138. Moreover, since Metaclad, the “reasonably to be expected economic benefit” is generally

considered as a criterion for finding expropriation.111 To this end, the Tribunal in Texaco

emphasized that

108 Uncontested facts para. 14. 109 ECHR James and Others, supra fn. 74, pages 19-20. 110 International Thunderbird Gaming Corporation v. The United Mexican States, UNCITRAL, Arbitral Award

26 January 2006, para. 147. 111 Metalclad v. Mexico, supra fn. 86, para. 103.

34

“where the state has concluded with a foreign contracting party an

internationalized agreement [...] The state has placed itself within the

international legal order in order to guarantee vis-à-vis its foreign

contracting party a certain legal and economic status over a certain

period of time.”112

139. In the case at hand, Oceania concluded two BITs, one with Eastasia and one with

Euroasia. Consequently, Oceania placed itself within the international legal order.

According to Art. 4 Euroasia BIT, Oceania guaranteed that:

“Investments by investors of either Contracting Party may not directly

or indirectly be expropriated, nationalized or subject to any other

measure the effects of which would be tantamount to expropriation”.

140. Further, as pointed out in Art. 13 (2) Euroasia BIT

“[the] Agreement [and all conferred rights] shall remain in force for a

period of twenty years. It shall continue to be in force thereafter for an

unlimited period unless denounced in writing through diplomatic

channels by either Contracting Party within the period of twelve months

before its expiration.”

141. Thus, Oceania not only granted investors the right to enjoy international protection under

the treaty for a period of twenty years, it also specified that any change to this protection

after the twenty-year period must be denounced in writing through diplomatic channels.

In the case at hand, this language produced two legitimate expectations on the part of

Mr. Explosive. First, it produced a legitimate expectation that the Oceanian government

would not violate his investor's rights within the twenty-year period. Second, it produced

a legitimate expectation that his investor's rights would enjoy unlimited protection under

the BIT unless he were notified through diplomatic channels twelve months in advance.

By indirectly expropriating Mr. Explosive´s investment through the Executive Order

within the twenty-year period, and by failing to provide Mr. Explosive with any notice

that the rights granted to him by the Euroasia BIT would change, Oceania violated both

of these legitimate expectations.

112 Texaco Overseas Petroleum Co, California Asiatic Oil Co v. Government of Libyan Arab Republic, Award,

Ad Hoc Arbitration 1977, 53 ILR 389 (1997), 19 January 1977.

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142. In conclusion, Oceania expropriated Mr. Explosive´s investment because (1) it deprived

him of an economic benefit that (2) was substantial, and that (3) he reasonably expected,

either through (4) indirect expropriation or measures tantamount to expropriation.

Additionally, (5) he was deprived of effective control over his investment, and (6) the

Executive Order was not proportionate to the aim sought to be realized.

II. Alternatively, should the Tribunal find that no indirect expropriation occurred,

Oceania breached its obligation to provide the standard of Fair and Equitable

Treatment (FET) to Mr. Explosive´s investment pursuant to

Art. 2 (2) Euroasia BIT

143. On the basis of precedent arguments on indirect expropriation Mr. Explosive submits that,

Oceania has acted contrary to the requirements of Fair and Equitable Treatment (FET),

because firstly, Oceania did not provide a predictable and transparent legislative

framework for Mr. Explosives investment; secondly, Oceania acted in an arbitrary

manner; thirdly, Oceania did not meet Mr. Explosive´s legitimate expectations; and

fourthly, Oceania did not act in Good Faith.

A. The FET Standard is a higher Standard than that of the Minimum Standard of

Treatment under International Law

144. Oceania breached the FET clause found in Art. 2 (2) Euroasia BIT. The clause provides

that:

“Each Contracting Party shall in its territory accord investments by

investors of the other Contracting Party fair and equitable treatment as

well as full protection and security.”

145. The standards of treatment of investors as provided in the BITs can be classified as either

autonomous113, or as Minimum Standard of Treatment (MST) under International Law.114

113 Alex Genin and others v. Republic of Estonia, ICSID Case No. ARB/99/2, Award, 25 June 2001, para 367; SD

Myers Incorporated v. Canada, First partial award on liability, merits and separate opinion, IIC 249, 20th June

2006, para 259; CME v. Czech Republic, supra fn.85, para 611; United Parcel Service of America Inc. v.

Government of Canada, Decision on Jurisdiction, 22 November 2002, para 80; El Paso Energy International

Company v. Argentina, Award, ICSID Case No ARB/03/15, IIC 519, 31 October 2011, para 337. 114 Mondev International Limited v. United States, Award, ICSID Case No ARB (AF)/99/2, IIC 173, 11 October

2002, para. 100; United Parcel v. Canada, para 97; ADF Group Incorporated v. United States, Award, ICSID

Case No ARB(AF)/00/1, 9 January 2003; Glamis Gold Limited v. United States, Award, IIC 380, 8 June 2009,

36

Reference to the MST is not present in Article 2 (2) Euroasia BIT. Thus, the FET

provision provides protection as an autonomous FET standard. If the parties had intended

to refer to customary International Law they would have “[referred] to it as such rather

than using a different expression.”115 However,

“this discussion [is considered] to be somewhat futile, as the scope and

content of the minimum standard of international law is as little defined

as the BITs’ FET standard, and as the true question is to decide what

substantive protection is granted to foreign investors through the FET.

The issue is not one of comparing two undefined or weakly defined

standards; it is to ascertain the content and define the BIT standard of

fair and equitable treatment.”116

146. Therefore, the determination of an FET breach depends on the warranty deeds that have

been established in precedent arbitral practice.117

B. Oceania did not provide a predictable and transparent legislative framework

147. Mr. Explosive submits that Oceania violated the Euroasia BIT’s FET clause by acting

without transparency and by acting unpredictably. In various arbitral decisions, Tribunals

have stressed the importance of transparency regarding the investment-related legal

framework.118 The Tribunal in Metalclad determined transparency as follows:

“[Transparency] include[s] the idea that all relevant legal requirements

for the purpose of initiating, completing and successfully operating

investments made, or intended to be made, under the Agreement should

be capable of being readily known to all affected investors of another

Party. There should be no room for doubt or uncertainty on such

matters.”119

para 599; Chemtura Corporation v. Canada, Award, IIC 451 (2010), ICGJ 464 (PCA 2010), 2 August 2010,

para 12. 115 Dolzer/Schreuer, page 134. 116 El Paso v. Argentina, supra fn.113, para. 335. 117 Dolzer/Schreuer, page. 133; Vandevelde, page 76; UNCTAD, FET, 2.; Brower/Schill, p. 487. 118 Saluka v. Czech Republic, Partial Award of 17 March 2006, para. 164; Waste Management v. Mexico, supra fn.

93, para 98; CME v. Czech Republic, supra fn. 85, para 611. 119 Metalclad v. Mexico, supra fn. 86, para. 76.

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148. In this sense “it must be distinguishable with which regulations and administrative

decisions the investor has to conform.”120 Accordingly, the Tribunal in Tecmed pointed

out that the host state is under the obligation to act

“totally transparently in its relations with the foreign investor, so that it

may know beforehand any and all rules and regulations that will govern

its investments, as well as the goals of the relevant policies and

administrative practices or directives, to be able to plan its investment

and comply with such regulations.”121

149. In the case at hand, the measures taken by Oceania, more precisely the issuing of an

Executive Order on Blocking Property of Persons Contributing to the Situation in the

Republic of Eastasia, have been exercised obscurely rather than transparently. As

demonstrated above, it was not foreseeable for Mr. Explosive that the situation in

Fairyland would lead to an Executive Order. Equally, it was not foreseeable that the value

of share of Rocket Bombs Ltd would be reduced to almost zero. In fact, Oceania did not

even publish any official notice in relation to the arising dispute. Although the media

reported on the preparation of the Executive Order before it was actually published and

entered into force, the media merely cited unnamed sources. Shady media reports are

clearly not reliable and leave a massive “room for doubt and uncertainty”. Mr. Explosive

was left in a clueless position until he became aware of the Executive Order on 1 May

2014.

150. Moreover, it was not even “distinguishable with which regulations and administrative

decisions” Mr. Explosive had to conform until the Executive Order was published on 1

May 2014. Indeed, Mr. Explosive did not become aware of “the goals of the relevant

policies and administrative practices or directives” and accordingly, Mr. Explosive was

not “able to plan its investment and comply with such regulations.”

151. Hence, Oceania did not provide a transparent and predictable framework.

120 Kläger, page 118. 121 Tecmed v. Mexico, supra fn. 104, para. 154.

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C. Oceania acted in an arbitrary manner

152. Besides the obligation to act transparently, arbitral Tribunals found

“a breach of the fair and equitable treatment standard [...] in respect of

conduct characterized by ‘arbitrariness’."122

153. The Tecmed Tribunal further defined arbitrary conduct

“as presenting insufficiencies that would be recognized ‘…by any

reasonable and impartial man,’ or, although not in violation of specific

regulations, as being contrary to the law because: ...(it) shocks, or at least

surprises, a sense of juridical propriety.”123

As set out above, the manner in which Oceania issued the Executive Order was neither

transparent nor non-arbitrary. The fact, that Oceania did not issued any notice regarding

their “administrative practice or directives” “shocks, or at least surprises, a sense of

juridical propriety” and indeed, the arbitrary nature of Oceania’s actions should cause

“any reasonable and impartial man would recognize” these actions “as contrary to the

law”.124

154. Therefore, Oceania acted in an arbitrary manner.

D. Oceania did not meet Mr. Explosive´s legitimate expectations

155. The legitimate expectations of an investor are considered as the key element of FET.125

This principle entails the obligation on the host state to act in a manner that is not

convenient to frustrate any legitimate investment backed expectation that was relied upon

by the investor at time of making the investment.126 Furthermore, the legitimate

expectations principle requires that

122 Total SA v Argentina, Decision on liability, ICSID Case No ARB/04/1, IIC 261, 27 December 2010, para 110. 123 Tecmed v Mexico, supra fn. 104, para. 154. 124 Ibid. 125 Fietta, 395; Jacob/Schill in: International Investment Law, page 723. 126 UNCTAD FET, 64.

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“the host State will not alter the legal and business environment and/or

administrative practices upon which the investment has been made."127

1. Object and purpose of FET provision

156. In considering the object and purpose for which Oceania and Euroasia included the FET

provision in the BIT, it is noteablee that the Preamble of the Treaty contains a consensus

that “a stable framework for investment will maximise effective utilization of economic

resources and improve living standards”128 and that both parties desire “to promote

greater economic cooperation with respect to investment by nationals and enterprises”129.

Thus, especially in this case, “stability of the legal and business framework is an essential

element of fair and equitable treatment”.130

2. Representations made by the host state

157. Moreover, “it is relevant that the treatment is in breach of representations made by the

host state which were reasonably relied on by the claimant.”131 In fact, Oceania did not

make any representations that would suggest a major change in Rocket Bomb´s business

framework. Nevertheless, the issued Executive Order led to major changes in the business

framework, because it resulted in an almost complete loss of the value of Rocket Bomb´s

shares. Consequently, Oceania failed the standard set forth in LG&E v. Argentina: “to act

with transparency –that is, all relevant legal requirements for the purpose of initiating,

completing and successfully operating investments made, or intended to be made under

an investment treaty should be capable of being readily known to all affected

investors.”132

127 Tellez, at p 438. 128 Euroasia BIT. 129 Euroasia BIT. 130 LG&E v Argentina, Decision on Liability, 3 October 2006, para 124. 131 Waste Management v. Mexico, supra fn. 93, para 98. 132 LG&E v Argentina, supra fn. 130, para 128.

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3. Legitimate expectations in reliance on the stabilization clause, Art. 12 Euroasia

BIT

158. Furthermore, Mr. Explosive´s legitimate expectations are closely linked to the

stabilization clause set out in Art. 12 Euroasia BIT. Any investor who relies on a BIT

which sets out a stabilization clause can reasonably expect no outrageous consequences

due to a political situation.133

159. In relation to the principle of “legitimate expectations”, Art. 26 VCLT constitute that

“every treaty in force is binding upon the parties to it and must be performed by them in

good faith.” “Therefore, pacta sunt servanda would seem to be an obvious application of

the stability requirement”.134 Further, in LETCO v. Liberia the Tribunal explained:

“[The] ‘Stabilization Clause’, is commonly found in long-term

development contracts and … is meant to avoid the arbitrary actions of

the contracting government. This clause must be respected, especially in

this type of agreement. Otherwise, the contracting State may easily avoid

its contractual obligations by legislation.”135

160. In the case at hand, Art. 12 Euroasia BIT stipulates the following:

“This Agreement shall be in force irrespective of whether or not

diplomatic or consular relations exist between the Contracting Parties.”

161. Mr. Explosive made his investment in reliance on the Euroasia BIT, and especially Art.

12 Euroasia BIT created “reasonable and justifiable expectations” on Mr. Explosive “to

act in reliance on said conduct”and indeed, Mr. Explosive did so; not only did he purchase

100% of the shares of Rocket Bomb Ltd and invest his time as president and sole member

of the board, he also fully integrated his business in the Fairyland community of Valhalla

as its primary employer.

162. Nevertheless, Oceania ignored Art. 12 Euroasia BIT by issuing the Executive Order,

particularly its commitment to protect investors rights “whether or not diplomatic or

133 Thunderbird v. Mexico, supra fn. 110, para. 147. 134 Dolzer/Schreuer, page 152. 135 Liberian Eastern Timber Corporation v. Liberia, (1987) 2 ICSID Rev-FILJ 188, 650 F Supp 73 12

December 1986, para 358.

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consular relations exist between the Contracting Parties.” The Executive Order not only

resulted in a complete hold in sales for Rocket Bombs Ltd, but also reduced the value of

Mr. Explosive´s shares to almost zero, devastating the community of Valhalla in the

process. Moreover, the duty to act in compliance with the BIT is of particular importance

because “otherwise, [Oceania] may easily avoid its contractual obligations by

legislation”. If the Tribunal allows the Executive Order to deprive Mr. Explosive of his

investment in this case, there will be nothing to prevent Oceania from issuing additional

Executive Orders depriving other similarly situated investors in the future. Therefore,

because Mr. Explosive relied on the stabilization clause in Art. 12 Euroasia BIT, Oceania

did violate his legitimate expectations.

163. As a result, the failure to provide a stable and legal environment infringed Mr. Explosive´s

legitimate expectations.

III. Mr. Explosive did not contribute to the damages suffered

164. Contrary to Oceania's accusation, Mr. Explosive did not contribute to the damage suffered

by its investment. Mr. Explosive submits that (A) the continued supply of weapons to

Euroasia cannot be qualified as a risk management failure; (B) Mr. Explosive reasonably

relied on the stabilization clause; and (C) Mr. Explosive did not fail to mitigate damages.

A. Mr. Explosive did not contribute to the damages because the risk of losing all sales

was not inherent in the undertaking of operating in the arms sector

165. In Bayerische HNL the European Court of Justice found that government-caused damages

to a given sector will be compensated when a government adopts measures of economic

regulation that

“exceed the bounds of the economic risks inherent in the activities of the

undertaking operating in that sector.”136

136 Bayerische HNL and others v. Council and Commission Joined, Cases 83 & 94/76 and 4, 15 & 40/77 [1978]

ECR.

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166. In the case at hand, the crucial question in determining whether Mr. Explosive is entitled

to damages is whether the Executive Order exceeded the bounds of the economic risk that

Mr. Explosive undertook in operating in Oceania´s arms sector.

167. Oceania denounces Mr. Explosive´s continued supply of weapons even after

Mr. Explosive should have known of Euroasia’s intention to incorporate Fairyland into

its territory.137 Indeed, Mr. Explosive could have known of Euroasia’s intention to

incorporate Fairyland.

168. Nevertheless, Mr. Explosive could not have foreseen the risk of an uncooperative

secession. As demonstrated in the section above, the mere fact that a secession occurred

could not by itself lead Mr. Explosive to conclude that a complete hold in business was

likely or even possible. Instead, it was even more likely for Mr. Explosive to expect a

peaceful reunification because the people of Fairyland were peacefully and

democratically exercising their rights.

169. Moreover, it was clearly not predictable that Oceania would impose sanctions upon

Rocket Bombs Ltd after the reunification occurred. Mr. Explosive could not have

foreseen the future expropriation and complete loss of sales on basis of the Executive

Order alone.

170. Therefore, the effect of indirect expropriation caused by the imposition of sanctions upon

Rocket Bombs Ltd exceeded the “bounds of economic risk inherent in the activity in

question”.

B. Mr. Explosive did not contribute to the damages because he reasonably relied on

the stabilization clause of Art. 12 Euroasia BIT

171. In addition to the unforeseeable consequences, Mr. Explosive further submits that in

balancing the possible risks, he reasonably relied on the stabilization clause in

Art. 12 Euroasia BIT. As previously demonstrated, stabilization clauses are used to

mitigate political risks138 and therefore they are closely linked to the “legitimate

137 Answer to Request for Arbitration page 16. 138 Dolzer/Schreuer, page 160.

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expectation” of an investor. Thus, because Mr. Explosive reasonably relied on the

stabilization clause, he legitimately expected no outrageous consequences resulting from

a political situation.

172. Therefore, because Mr. Explosive relied on the stabilization clause in

Art. 12 Euroasia BIT and because that reliance was legitimate, he did not contribute to

the damages, but Oceania´s failure “to honour those expectations” did cause

Mr. Explosive to suffer significant damages.

C. Mr. Explosive did not fail to mitigate damages because he did not have the

possibility to do so.

173. The ICC in Bridas Sapic found that

“The extent to which a party is obliged to mitigate and the economic

consequences of failing to do so, are matters of judgement based on the

evidence and the circumstances applicable to the dispute.”139

174. As demonstrated above, in the case at hand, Mr. Explosive could not have foreseen the

indirect expropriation due to the Executive Order which led to losses of no less than

120,000,000 USD.140 Indeed, it is not possible to mitigate damages that are actually not

foreseeable.

175. Moreover, even if some obscure fact could have led to a duty to mitigate, the actual

circumstances in the present dispute make it impossible for Mr. Explosive to do so.

176. Firstly, it is undisputed that Euroasia was Rocket Bombs’ main customer.141 Even if

Mr. Explosive terminated the contract with Euroasia in anticipation of the reunification,

the production line still would have to be partially closed, many workers would still be

made redundant, the financial deterioration of the company would still have occurred,

and as a result, the value of Mr. Explosive´s shares would still be almost to zero.142 Thus,

139 BRIDAS SAPIC and ors v Turkmenistan, Third Partial Award and Dissent, ICC Case No 9058/FMS/KGA,

IIC 37 (2000), 6th September 2000, International Court of Arbitration. 140 Request for Arbitration, page 6. 141 Request for Arbitration, page 4. 142 Ibid. page 4 f.

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a termination of all contractual relations with Euroasia would not have mitigated the

losses. Secondly, Rocket Bombs Ltd would probably have to pay damages to Euroasia for

not acting in compliance with the contract and thus breaching the basic principle pacta

sunt servanda set out in Art. 26 VCLT.

177. Therefore, Mr. Explosive submits that he could not possibly have been able to fulfil the

duty to mitigate because there was simply no possibility to do so.

CONCLUSION ON THE MERITS

178. Oceania has breached its international obligations with respect to expropriation as well

as the standard of fair and equitable treatment. Also, Mr. Explosive did not have the duty

to mitigate and consequently Mr. Explosive submits that Oceania must award

compensation in value no less than 120,000,000 USD.

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REQUEST FOR RELIEF

179. Claimant respectfully asks the Tribunal to find that:

1. The requirements of both ratione personae and ratione materiae are satisfied and

therefore the Tribunal has jurisdiction over the present dispute;

2. The Republic of Oceania has expropriated Mr. Explosive´s investment by the

implementation of the sanctions and introduction of Executive Order of 1 May 2014;

3. Mr. Explosive is entitled to compensation in value no less than 120,000,000 USD, with

interest as of the date of issuance of the award.

case no 28000/ac - fdi moot · 2016-09-18 · on issues in international investment agreements ii,...

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